June 21, 2010

This local newspaper entry, which is headlined "Sholom Rubashkin to receive 27-year prison sentence," reports on the severe sentencing outcome in a high-profile federal white-collar case out of Iowa. Here are the early details:

Sholom Rubashkin will receive a 27-year federal prison sentence on Tuesday for his leadership in the financial fraud scandal at Agriprocessors Inc., a judge declared today. U.S. District Judge Linda Reade will impose a 324-month prison term for the former eastern Iowa meat plant mogul, followed by 5 years of supervised release, according to a ruling filed this morning.

She also will order Rubashkin to pay $18.5 million to First Bank Business Capital, the plant’s largest lender; $8.3 million to MB Financial Bank, another lender; and $3,800 to Waverly Sales, Inc., which received late payments from the plant for cattle.

Rubashkin was convicted of 86 financial fraud charges last November for leading the scheme to defraud the banks. A South Dakota jury concluded at trial that Rubashkin had ordered employees to create bogus financial documents to collect advances on a revolving loan. The plan collapsed shortly after a May 2008 immigration raid at Agriprocessors in Postville, when the slaughterhouse plummeted into bankruptcy.

Reade rejected defense arguments that Rubashkin lacked the authority to stop the criminal conduct at the Postville slaughterhouse founded by his father. She cited 11 examples from his trial, including testimony that he directed employees to create false sales records, and helped illegal immigrant employees secure false work papers.

Rubashkin’s “degree of control and authority was close to absolute,” Reade wrote in the 52-page ruling. “He told his employees when, where and how to commit the various crimes.” Reade said Rubashkin lied at his trial when he testified that he never told employees to create fake sales records and customer checks. His testimony conflicted with former employee accounts that were more believable, she said.

She also rejected defense arguments for a lesser sentence because of his charitable work, his relationship with his 16-year-old autistic son, Moishe, and other family responsibilities. “Defendant devotes a substantial amount of evidence and argument to his contention that his offenses of conviction were not motivated out of a sense of personal greed, but rather, out of a sense of duty to maintain his family business for religious purposes,” Reade wrote.

“No matter Defendant’s motive, he defrauded the victim banks out of millions of dollars. He unlawfully placed his family business’s interest above the victim banks’ interest. His family business and he personally benefitted at the expense of all the victim banks’ innocent shareholders.”

She later added: “Additionally, it is entirely possible that a number of Defendant’s charitable deeds were funded with proceeds from his crimes. It is far easier to be generous with someone else’s money instead of one’s own.”

Prosecutors had asked Reade to impose a 25-year sentence. Rubashkin’s attorneys requested no more than six years. Defense lawyers said they plan to appeal Rubashkin’s conviction and sentence. “We believe that the sentence is greater than necessary,” said Rubashkin lawyer Guy Cook, of Des Moines. “It’s even greater than the government asked for. It’s unfair and excessive. It’s essentially a life sentence for a 51-year-old man, and it’s not in the public interest.”

Reade said she will read her sentence memorandum in federal court Tuesday in Cedar Rapids. Prosecutors and defense attorneys have scheduled press conferences afterward to speak about the case.

It appears that Judge Reade rejected virtually all of the defense's guideline-based and non-guideline arguments for a lesser sentence for Sholom Rubashkin. It also seems that she wrote a very lengthy sentencing opinion to explain the exercise of her sentencing judgment. I will post that opinion when I can track down a copy.

Comments

After a quick skim, it appears the court did agree with at least two of the Defendant's arguments. It held it would not increase the BOL based on number of victims and it held Chapter 3's abuse of trust enhancement did not apply. This is likely why the PSR calculated a GL range of life, while the court's range was 324-405.

I think one quite notable part of the opinion (again, after only a quick over-view of it) is that it subtly threatens the Defendant not to appeal:

"Although an upward departure would be permitted under USSG §5K2.0(a)(3) and § 5K2.21, the court declines to depart upward . . . [I]n the event the court is required to re-sentence Defendant, it reserves the right to revisit these upward departure provisions to determine whether their application would be appropriate." (Opinion at 46)

"Were the court to vary, the court would vary upward to take into account additional criminal conduct involving harboring of illegal aliens, which was charged in over seventy counts of the Seventh Superseding Indictment and were later dismissed." (Opinion at 50)

"The court notes that, even if it inadvertently erred in computing the advisory
Guidelines sentence, it would still impose a sentence of 324 months of imprisonment after considering the factors in § 3553(a)." (Opinion at 50 n.18)

Posted by: DEJ | Jun 21, 2010 5:28:18 PM

i don't know!

""Although an upward departure would be permitted under USSG §5K2.0(a)(3) and § 5K2.21, the court declines to depart upward . . . [I]n the event the court is required to re-sentence Defendant, it reserves the right to revisit these upward departure provisions to determine whether their application would be appropriate." (Opinion at 46)"

Sounds like a textbook example of the CRIMINAL ACTIVIY called BLACKMAIL or extrotion. so here we have another judge who deserves death like any other criminal who takes a life. and 27 years at his age is his life.

hope he at least managed to stash the loot! so the feebees and the banks dont' get one red cent!

Posted by: rodsmith3510 | Jun 22, 2010 2:51:42 AM

Banks I'm familiar with don't operate like unmonitored ATM machines to which lenders are blindly entrusted with carte-blanche access and unlimited lines of credit.

My bankers probably know more about my two small businesses than I do. So I'm always a little amazed to hear about "victim" lenders being taken for tens of millions of dollars by outlaw borrowers whose dealings the banks presumably pour over in routine, bottom-line audits.

"Fake documents"? Maybe. Still, I have to wonder if Rubashkin is some sort of evil genius at misdirection and sleight of hand or the banks simply stink at safeguarding shareholders and depositors money...and therefore might bear at least a little responsibility for their own negligence or gullibility.

I'm also in touch with the sort of angst, depression and desperation that jars the soul as legacy money succumbs to a severe recession...let alone an all-out assault on my workers by platoons of federal goons garbed in Darth Vader costumes.

So it's easy for me, if not for this particular hard-ass judge, to empathize with an otherwise descent person for making bad decisions of the sort Rubashkin apparently made under awful circumstances.

Sure, he deserves to be punished. But a virtual life sentence? Only by a judge and prosecutors who chose to see Rubashkin as an arch criminal as opposed to a distraught human being who crossed the line.

Still, the sound you'd be hearing if this were an audio clip would be me applauding Judge Reade for her spectacular "Tough As Nails" tap-dance routine.

Posted by: John K | Jun 22, 2010 10:47:07 AM

These white collar sentences mystify me. My last foray into federal court was a pretty straight forward meth manufacture/distribution case with an ICE enhancement. The guy picked up another state possession with intent while out on bond. Pages of priors. 15 years. This guy gets 27 years for financial crimes, despite what seem to be some legitimate (at least non-frivilous) grounds for a downward departure. I just don't see who wins here: the taxpayer? the victims? maybe the prison industry?

Posted by: Ala JD | Jun 22, 2010 11:26:08 AM

John K,

Ummm, May 2008 was mostly before the current economic situation. Certainly we were headed toward the cliff and even had our foot on the gas but we hadn't taken the plunge yet. And that makes me think most of the criminal activity was before even that. So it sounds a lot more like simple greed to me than trying criminal means after legitimate ones had failed. From what Doug psted, his trying to blame the situation as an inherited one makes that even less likely.

Try peddling that poor victim-criminal line elsewhere.

Posted by: Soronel Haetir | Jun 22, 2010 11:28:29 AM

Soronel, check the dates for when gasoline prices were nudging and sometimes passing the $4 mark. Unless I'm mistaken, shipping and transportation costs were especially burdensome on businesses like meat-packing plants.

Beyond that, what business can long survive after its workers have been carted off and its doors padlocked?

Posted by: John K | Jun 22, 2010 12:04:21 PM

Also, my point isn't that he's a victim. It's that he's a human being more deserving of empathy (even with significant punishment) than the grandstanding and braying by prosecutors and a guidelines judge.

Posted by: John K | Jun 22, 2010 12:08:51 PM

Perhaps he should have hired legal workers and they wouldn't have been carted off. Pattern and practice rather than isolated incidents. Too bad more employers who make a habit of hiring illegal aliens don't face this sort of penalty.

Posted by: Soronel Haetir | Jun 22, 2010 1:10:40 PM

The overarching "pattern and practice" before the Iowa raid was the federal government's habit of looking the other way. Apparently the plant had been hiring illegals as far back as the 1980s.

But then came Lou Dobbs -- asserting that poor illegals working in horror-show packing plants posed a greater threat to the economy than "American" corporations moving jobs into slave-labor countries like China and India.

Then came an election-year opportunity for the Bush Administration to pander to Dobbs mobs. The rest is history.

Posted by: John K | Jun 22, 2010 2:53:09 PM

JohnK --

Your sympathy for thieves is unfailing.

Posted by: Bill Otis | Jun 22, 2010 3:36:21 PM

Sympathy for flawed human beings isn't a bad thing...unless you happen to be a prosecutor. Then it's a career impediment.

Posted by: John K | Jun 22, 2010 9:27:49 PM

JohnK --

When the human "flaw" is rapacious greed and continuous, mind-numbing dishonesty, as it was here, you're quite right that I have no sympathy.

And if you're waiting for me to apologize for my career as a prosecutor, you'll be waiting a long time.

No society on earth has or could afford the knee-jerk swooning for swindlers you routinely display on this blog. Are you really so thoroughly blind to the avarice and betrayal of principle these people show? Do you even know what avarice is? Apparently not, since, with you, it's always mere unfortunate "circumstances."